Under current IRS Reg's, when making a "transfer" of the proceeds of
a Life Insurance Product or Annuity to a "SIMILAR" product, there is no
CURRENT Income tax due.
This is called a "1035 Exchange". The best way to do this is to have the funds
transferred DIRECTLY from one company to the other.
Cal Lester CLU


<winterqqqq[at]hotmail.com> wrote in message
news:1123951948.805490.310890[at]g44g2000cwa.googlegroups.com...
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On 13 Aug 2005, winterqqqq[at]hotmail.com <winterqqqq[at]hotmail.com> wrote:
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If you are from the U.S. look up annuity yourself on http://www.irs.gov/

It might need to be a direct trustee to trustee transfer to avoid
withholding or tax, unless annuities have provisions like IRA's for 60 day
rollover. But if payment is made directly to you (check or direct
deposit) they might withhold 10% by default (vs. 20% withholding for
qualified plans).

I just cashed out a whole life policy I did not need, but let them take
the 10% withholding, since I was using that to pay off a credit card and
open a Roth IRA. I also adjusted my W-4 to withhold enough tax to cover
the rest of that and partial IRA to Roth IRA conversion.

Suppose a non-qualified annuity is cashed when it is past the surrender
penalty period, and then the lump sum, including earnings, is
reinvested in another non-qualified annuity with a different company.
Is this a taxable event?

Thank you.

Dennis